EXHIBIT 10.2
------------
FIRST AMENDMENT TO THE LOAN AGREEMENT
-------------------------------------
This FIRST AMENDMENT TO THE LOAN AGREEMENT ("AGREEMENT") is made
effective as of, although not necessarily on, the 1ST DAY OF JANUARY, 1997, by
and between GUARANTY FEDERAL BANK, F.S.B., a federal savings bank ("BANK") and
HOMEOWNERS MORTGAGE & EQUITY, INC., a Delaware corporation, D/B/A HOME, INC.
("BORROWER") and HOMECAPITAL INVESTMENT CORPORATION, a Nevada corporation
("GUARANTOR").
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, effective as of NOVEMBER 8, 1996, Borrower and Bank entered
into that certain WORKING CAPITAL LINE OF CREDIT AND SECURITY LOAN AGREEMENT
[SERVICING SECURED] (together with all amendments, modifications and
restatements thereof, the "LOAN AGREEMENT") dated of even date therewith
providing for a $3,000,000.00 credit facility (together with all increases,
collectively, the "LOAN").
WHEREAS, in connection with the execution of the Loan Agreement,
Borrower executed that certain Promissory Note dated of even date (the "NOTE"),
and a Financing Statement filed with the Secretary of State of Texas (the
"FINANCING STATEMENT") (the Loan Agreement, Note, Financing Statement and all
other documents representing, evidencing and/or securing the Loan are
hereinafter referred to as the "LOAN DOCUMENTS");
WHEREAS, Bank, Borrower and Guarantor desire to amend the Loan
Documents to reflect certain changes to the Loan Documents. All terms not
defined herein are used as defined in the Loan Agreement.
NOW, THEREFORE, for and in consideration of the premises and the
mutual covenants and agreements contained herein, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Bank and Borrower hereby agree as follows:
1. LOAN AGREEMENT. The following modifications are hereby made to
the Loan Agreement effective as of the date hereof:
(a) PAGE 3, the definition of "COLLATERAL VALUE" is hereby modified to
read in its entirety:
""COLLATERAL VALUE" shall mean the lesser of (A) fifty percent
(50%) of the Appraised Value of the Excess Servicing Receivables
relating to Eligible Collateral pledged to Bank, as determined on the
date hereof, on the date of any Advance and on December 31, March 31,
June 30 and September 30 of each year by an appraiser selected by
Borrower acceptable to Bank in its sole discretion, which appraisal
shall be paid for by Borrower and shall be acceptable to Bank in its
sole discretion or (B) the amount of such Excess Servicing Receivables
capitalized on Borrower's balance sheet in accordance with GAAP."
(b) PAGE 4, the definition of "ELIGIBLE COLLATERAL" is hereby modified
to read in its entirety:
""ELIGIBLE COLLATERAL" means FNMA Servicing Rights (under which
the only remedy available to FNMA is termination of the Servicing
Agreement) owned by the Borrower for which the related Mortgage Loans
serviced are no more than sixty (60) days delinquent, are not in the
process of foreclosure or bankruptcy and are qualified as FNMA Title I
Loans."
(c) PAGE 4, the definition of "EXCESS SERVICING RECEIVABLES" is hereby
modified to read:
""EXCESS SERVICING RECEIVABLES" shall mean the amount capitalized
on Borrower's balance sheet which reflects the present value of future
cash flows estimated to be received by Borrower subsequent to loan
sales to FNMA. The cash flow streams that are discounted are based on
the difference between (A) the gross note rate of a Mortgage Loan sold
to FNMA and which is being serviced by Borrower under an Agency
Servicing Agreement for FNMA and (B) the sum of (i) the rate paid with
respect to such Mortgage Loan to FNMA under such Agency Servicing
Agreement plus (ii) the subservicing fee payable to the Subservicer
attributable to such Mortgage Loan."
(d) PAGE 7, the definition of "MATURITY DATE" is hereby modified to
read in its entirety:
""MATURITY DATE" shall mean JANUARY 31, 1998."
(e) PAGE 9, the definition of "OPERATING ACCOUNT" is hereby deleted.
(f) PAGE 9, a new definition of "PROPOSED INDEBTEDNESS" is hereby
added in alphabetical order:
""PROPOSED INDEBTEDNESS" shall mean subordinated debt and
approved gestation financing listed on EXHIBIT "K" after such
indebtedness has been approved by Bank in its sole and absolute
discretion after receiving certified copies of the proposed loan
documents relating to such indebtedness and the executed loan
documents pertaining to such indebtedness."
(g) PAGE 11, SECTION 2.1(A), fifth line, the figure of "Three Million
and No/100 Dollars ($3,000,00.00)" is hereby modified to read "FIVE MILLION
AND NO/100 DOLLARS ($5,000,000.00)."
(h) PAGE 12, SECTION 2.2(B)(VI) is hereby modified to read:
"(vi) the Funding Account and the Settlement Account shall be
established and in existence; and"
(i) PAGE 13, SECTION 2.2(C)(I) is hereby modified to read in its
entirety:
"(i) if requested by Bank, an Appraisal showing the Collateral
Value for the Eligible Collateral including the new Eligible
Collateral being pledged in connection with the Advance Request;"
(j) PAGE 16, SECTION 2.11 is hereby modified to read:
"SECTION 2.11 COMMITMENT FEE. As a condition to obtaining the
Commitment, the Borrower agrees to pay to the Bank the Commitment Fee
in advance (i) the amount of $3,750.00 each on November 8, 1996 and
January 1, 1997, (ii) on February 25, 1997 in the amount of $944.44
and (iii) on the first day of each calendar quarter thereafter
(January 1, April 1, July 1, October 1) the Commitment Fee equal
payments of $6,250.00 each."
(k) PAGE 18, SECTION 3.1, the final paragraph thereof, is hereby
modified to read:
"Bank grants to Borrower a license to receive, retain and spend
for its own account all Agency Servicing Payments and Non-Agency
Servicing Payments until the occurrence of an Event of Default or a
Default. Prior to a Default or Event of Default, upon receipt by
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the Borrower of any Agency Servicing Payments and Non-Agency Servicing
Payments, such Agency Servicing Payments shall be released from the
security interest and lien of the Bank hereunder and shall no longer
constitute Collateral hereunder."
(l) PAGE 25, SECTION 5.28(A) is hereby revised to replace the phrase
"second to last" with the word "final" in the second line.
(m) PAGE 26, SECTION 5.28(D) is hereby revised to replace the phrase
"second to last" with the word "final" in the first line.
(n) PAGE 27, SECTION 6.2(A) is hereby modified to add the following
language to the end of such section:
"As soon as available and in any event within one hundred twenty
(120) days after the close of each fiscal year of Guarantor, copies of
the consolidated and consolidating balance sheet of Guarantor as of
the close of such fiscal year and consolidated statements of income
and retained earnings, cash flow statements and changes in
stockholders' equity for such fiscal year, each setting forth in
comparative form the corresponding figures for the preceding fiscal
year, all in reasonable detail together with all notes thereto and
accompanied by an opinion thereon (which shall not be qualified by
reason of any limitation imposed by Guarantor) by Coopers & Xxxxxxx
LLP or by independent certified public accountants selected by
Guarantor and satisfactory to Bank, to the effect that such financial
statements have been prepared in accordance with GAAP and such other
professional practices as may then conform to the usual and customary
professional standards, practices and disclosures then in existence in
connection with the preparation and publication of financial
statements by independent certified public accountants and that the
examination of such accounts in connection with such financial
statements has been made in accordance with GAAP and, accordingly,
includes such tests of the accounting records and such other auditing
procedures as were considered necessary in the circumstances;"
(o) PAGE 30, SECTION 6.10, the first two lines are hereby modified to
read: "Except with respect to FNMA Title I Loans, the Borrower will obtain
and maintain in effect at all times an insured closing letter (if
obtainable) from each title insurance company..."
(p) PAGE 32, SECTION 7.1(III) is hereby modified to read: "(iii)
Existing Indebtedness and Proposed Indebtedness listed on EXHIBIT "G"
attached hereto and incorporated herein by this reference,"
(q) PAGE 33, SECTION 7.6(D) is hereby is hereby modified to read:
"(d) Owned real estate and Mortgage Loans, required to be repurchased
by Investors, not to exceed at any one time $500,000."
(r) SECTION 7.9 is hereby modified to read in its entirety:
"SECTION 7.9. NET WORTH. Borrower's Net Worth shall not be less
than the sum of (a) Net Worth as reflected in the most recent
financial statements delivered to Bank pursuant to SECTION 6.2(A),
plus (b) 80% of each subsequent fiscal quarters positive Net Income on
a cumulative basis since the report referenced in (a), plus (c) one
hundred percent (100%) of all contributions to stockholders' equity of
Borrower since the end of the preceding fiscal year after subtracting
all fees and costs directly incurred in conjunction with such
contribution."
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(s) SECTION 7.11 is hereby modified to read in its entirety:
"SECTION 7.11. ADJUSTED TANGIBLE NET WORTH. Borrower's Adjusted
Tangible Net Worth shall not be less than the greater of (a) the
Adjusted Tangible Net Worth required of Borrower for the preceding
calendar quarter [with the requirement for the final calendar quarter
of 1996 of $3,705,899.00] and (b) Borrower's actual Adjusted Tangible
Net Worth on the current Determination Date (January 1, April 1, July
1 and October 1 in each case, a "DETERMINATION DATE") multiplied by
eighty percent (80%)."
(t) EXHIBIT "A" is hereby modified to read in its entirety as shown on
EXHIBIT "A" attached hereto and incorporated herein by this reference.
(u) EXHIBIT "B" is hereby modified to read in its entirety as shown on
EXHIBIT "B" attached hereto and incorporated herein by this reference.
(v) EXHIBIT "C" is hereby modified to read in its entirety as shown on
EXHIBIT "C" attached hereto and incorporated herein by this reference.
(w) EXHIBIT "D" is hereby modified to read in its entirety as shown on
EXHIBIT "D" attached hereto and incorporated herein by this reference.
(x) EXHIBIT "F" is hereby modified to read in its entirety as shown on
EXHIBIT "F" attached hereto and incorporated herein by this reference.
(y) EXHIBIT "I" is hereby modified to read in its entirety as shown on
EXHIBIT "I" as attached hereto and incorporated herein by this reference.
(z) EXHIBIT "K" is hereby modified to read in its entirety as shown on
EXHIBIT "K" attached hereto and incorporated herein by this reference.
2. NOTE. Borrower shall execute a Note in the form attached hereto as
EXHIBIT "A" in modification of the existing Note.
3. GUARANTY. Guarantor shall execute a Guaranty in the form attached
hereto as EXHIBIT "B" in modification of the existing Guaranty.
4. ONE TIME WAIVER OF NEGATIVE COVENANT BREACH. Borrower has breached
the following financial covenants: (i) SECTION 7.06(D) of the Loan Agreement and
(ii) SECTION 7.11 of the Loan Agreement. Bank hereby waives such defaults
provided (a) with respect to SECTION 7.06(D) the repurchased owned real estate
and repurchased Mortgage Loans did not exceed $500,000.00 from July 1, 1996 to
December 31, 1996 and (b) Borrower's Adjusted Tangible Net Worth was equal to or
greater than $3,705,899.00 from September 30, 1996 through December 31, 1996.
5. ACKNOWLEDGEMENT BY BORROWER. Except as otherwise specified herein,
the terms and provisions of the Loan Documents are ratified and confirmed and
shall remain in full force and effect, enforceable in accordance with their
terms. Borrower hereby acknowledges, agrees and represents that (i) Borrower is
indebted to the Bank pursuant to the terms of the Note; (ii) the liens, security
interests and assignments created and evidenced by the Loan Documents are,
respectively, valid and subsisting liens, security interests
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and assignments of the respective dignity and priority recited in the Loan
Documents; (iii) the representations and warranties contained in the Loan
Documents are true and correct representations and warranties of Borrower, as of
the date hereof and no defaults exist under the Loan Documents; and (iv)
Borrower has no set-offs, counterclaims, defenses or other causes of action
against the Bank arising out of the Loan Documents, the modification and
extension of the Loan, any documents mentioned herein or otherwise and to the
extent any such set-offs, counterclaims, defenses or other causes of action may
exist, whether known or unknown, such items are hereby waived by Borrower.
6. ACKNOWLEDGEMENT BY GUARANTOR. Except as otherwise specified herein,
the terms and provisions of the Loan Documents are ratified and confirmed and
shall remain in full force and effect, enforceable in accordance with their
terms. Guarantor hereby acknowledges, agrees and represents that (i) Guarantor
is indebted to the Bank pursuant to the terms of the Note; (ii) the liens,
security interests and assignments created and evidenced by the Loan Documents
are, respectively, valid and subsisting liens, security interests and
assignments of the respective dignity and priority recited in the Loan
Documents; (iii) the representations and warranties contained in the Loan
Documents are true and correct representations and warranties of Guarantor, as
of the date hereof and no defaults exist under the Loan Documents; and (iv)
Guarantor has no set-offs, counterclaims, defenses or other causes of action
against the Bank arising out of the Loan Documents, the modification and
extension of the Loan, any documents mentioned herein or otherwise and to the
extent any such set-offs, counterclaims, defenses or other causes of action may
exist, whether known or unknown, such items are hereby waived by Guarantor.
7. NO WAIVER OF REMEDIES. Nothing contained in this Agreement shall
prejudice, act as, or be deemed to be a waiver of any right or remedy available
to the Bank by reason of the occurrence or existence of any fact, circumstance
or event constituting a default under the Note or the other Loan Documents.
8. COSTS AND EXPENSES. Contemporaneously with the execution and delivery
hereof, Borrower shall pay, or cause to be paid, all costs and expenses incident
to the preparation, execution and recordation hereof and the consummation of the
transaction contemplated hereby, including, but not limited to, recording fees
and reasonable fees and expenses of legal counsel to the Bank. The attorney's
fees and expenses of the Bank's law firm, Xxxxxxx & Xxxxxx, L.L.P., shall be
paid.
9. ADDITIONAL DOCUMENTATION. From time to time, Borrower shall execute
or procure and deliver to Bank such other and further documents and instruments
evidencing, securing or pertaining to the Loan or the Loan Documents as shall be
reasonably requested by the Bank so as to evidence or effect the terms and
provisions hereof.
10. EFFECTIVENESS OF THE LOAN DOCUMENTS. Except as expressly modified by
the terms and provisions hereof, each of the terms and provisions of the Loan
Documents are hereby ratified and shall remain in full force and effect;
provided, however, that any reference in any of the Loan Documents to the Loan,
the amount constituting the Loan, any defined terms, or to any of the other Loan
Documents shall be deemed, from and after the date hereof, to refer to the Loan,
the amount constituting the Loan, defined terms and to such other Loan
Documents, as modified hereby.
11. GOVERNING LAW. THE BORROWER HEREBY AGREES THAT THE OBLIGATIONS
CONTAINED HEREIN ARE PERFORMABLE IN DALLAS COUNTY, TEXAS. ALL PARTIES HERETO
AGREE THAT (I) ANY ACTION ARISING OUT OF THIS TRANSACTION MAY BE FILED IN DALLAS
COUNTY, TEXAS, (II) VENUE FOR ENFORCEMENT OF ANY OF THE OBLIGATIONS CONTAINED IN
THE LOAN DOCUMENTS SHALL BE IN DALLAS COUNTY, TEXAS, (III) PERSONAL JURISDICTION
SHALL BE IN DALLAS COUNTY, TEXAS, (IV) ANY ACTION OR PROCEEDING UNDER THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT MAY BE COMMENCED AGAINST BORROWER IN DALLAS
COUNTY, (V) SUCH ACTION MAY BE INSTITUTED IN THE COURTS OF THE STATE OF
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TEXAS LOCATED IN DALLAS COUNTY, TEXAS OR IN THE UNITED STATES DISTRICT COURT FOR
THE NORTHERN DISTRICT OF TEXAS LOCATED IN DALLAS COUNTY, TEXAS, AT THE OPTION OF
THE BANK AND (VI) THE BORROWER HEREBY WAIVES ANY OBJECTION TO THE VENUE OF ANY
SUCH SUIT, ACTION OR PROCEEDING AND ADDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO
BE SUED ELSEWHERE. NOTHING HEREIN SHALL AFFECT THE RIGHT OF EACH BANK TO
ACCOMPLISH SERVICE OF PROCESS IN ANY OTHER MANNER PERMITTED BY LAW.
12. TIME. Time is of the essence in the performance of the covenants
contained herein and in the Loan Documents.
13. BINDING AGREEMENT. This Agreement and the Loan Documents shall be
binding upon the heirs, executors, administrators, personal representatives,
successors and assigns of the parties hereto; provided, however, the foregoing
shall not be deemed or construed to (i) permit, sanction, authorize or condone
the assignment of all or any part of the Collateral or any of Borrower's rights,
titles or interest in and to the Collateral or any rights, titles or interests
in and to Borrower, except as expressly authorized in the Loan Documents, or
(ii) confer any right, title, benefit, cause of action or remedy upon any person
or entity not a party hereto, which such party would not or did not otherwise
possess.
14. HEADINGS. The section headings hereof are inserted for convenience of
reference only and shall in no way alter, amend, define or be used in the
construction or interpretation of the text of such section.
15. CONSTRUCTION. Whenever the context hereof so required, reference to
the singular shall include the plural and likewise, the plural shall include the
singular; words denoting gender shall be construed to mean the masculine,
feminine or neuter, as appropriate; and specific enumeration shall not exclude
the general but shall be construed as cumulative of the general recitation.
16. COUNTERPARTS. To facilitate execution, this Agreement may be executed
in as many counterparts as may be convenient or required. It shall not be
necessary that the signature and acknowledgement of, or on behalf of, each party
or that the signature and acknowledgement of all persons required to bind any
party appear on each counterpart. All counterparts shall collectively constitute
a single document containing the respective signatures and acknowledgement of,
or on behalf of, each of the parties hereto. Any signature and acknowledgement
page to any counterpart may be detached from such counterpart without impairing
the legal effect of the signatures and acknowledgements thereon and thereafter
attached to another counterpart identical thereto except having attached to it
additional signature and acknowledgement pages.
THIS AGREEMENT AND THE LOAN DOCUMENTS COLLECTIVELY REPRESENT THE FINAL
AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
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EXECUTED as of the date first above written.
BANK:
----
GUARANTY FEDERAL BANK, F.S.B.,
a federal savings bank
By: /s/ W. Xxxxx Xxxxxxxx
------------------------
W. Xxxxx Xxxxxxxx,
Assistant Vice President
BORROWER:
--------
HOMEOWNERS MORTGAGE & EQUITY, INC.,
a Delaware corporation d/b/a HOME, INC.
By: /s/ Xxxxx X. Xxxxxx
---------------------------
Xxxxx X. Xxxxxx,
Executive Vice President
GUARANTOR:
---------
HOMECAPITAL INVESTMENT CORPORATION,
a Nevada corporation
By: /s/ Xxxx X. Xxxxxxx
-------------------------------
Name: Xxxx X. Xxxxxxx
-----------------------
Title:President and CEO
----------------------
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STATE OF TEXAS (S)
(S)
COUNTY OF DALLAS (S)
This instrument was ACKNOWLEDGED before me the 14th day of April, 1997, by
W. Xxxxx Xxxxxxxx, Assistant Vice President of GUARANTY FEDERAL BANK, F.S.B., a
federal savings bank, on behalf of said bank.
/s/ Xxxx Xxxxxx
-----------------------------------
Notary Public - State of Texas
My Commission expires: ________________________________
01-17-2001 Printed Name of Notary
----------------------
STATE OF TEXAS (S)
(S)
COUNTY OF XXXXXX (S)
This instrument was ACKNOWLEDGED before me the 24th day of February, 1997,
by Xxxxx X. Xxxxxx, Executive Vice President of HOMEOWNERS MORTGAGE & EQUITY,
INC. d/b/a Home, Inc., a Delaware corporation, on behalf of said corporation.
--------------------------------
Notary Public - State of Texas
My Commission expires: /s/ Xxxx X. Xxxxxx
--------------------------------
7-15-2000 Printed Name of Notary
--------------------
STATE OF TEXAS (S)
(S)
COUNTY OF XXXXXX (S)
This instrument was ACKNOWLEDGED before me the 24th day of February, 1997,
by Xxxx X. Xxxxxxx, President & CEO of HOMECAPITAL INVESTMENT CORPORATION, a
Nevada corporation, on behalf of said corporation.
----------------------------------
Notary Public - State of Texas
My Commission expires: /s/ Xxxx X. Xxxxxx
7-15-2000 ----------------------------------
---------------------- Printed Name of Notary
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EXHIBIT "K"
-----------
EXISTING AND PROPOSED INDEBTEDNESS
Existing Indebtedness:
---------------------
Description Amount
----------- ------
Revolving note payable to
_____________________, maturing
July 29, 1996, bearing an interest
rate of prime plus 2.00% 1,354,031
Capital lease obligations 23,199
----------
$
==========
$_______________ loan from
________________________________________
$_______________ loan from
Keystone [shall not be permitted indebtedness
under Section 7.1(iii) after April 30, 1997]
Proposed Indebtedness:
---------------------
$_______________ loan from
________________________________________
$_______________ loan from
Keystone
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EXHIBIT "A" [WC]
-----------
PROMISSORY NOTE
---------------
$5,000,000.00 DALLAS, TEXAS January 1, 1997
FOR VALUE RECEIVED, the undersigned, HOMEOWNERS MORTGAGE & EQUITY, INC., A
DELAWARE CORPORATION, D/B/A HOME, INC. (herein called "BORROWER"), hereby
promises to pay to the order of GUARANTY FEDERAL BANK, F.S.B., a federal savings
bank (herein called "BANK"), the principal sum of FIVE MILLION AND NO/100
DOLLARS ($5,000,000.00) or, if less, the aggregate unpaid principal amount of
the Loan made under this Note by Bank to Borrower pursuant to the terms of the
WORKING CAPITAL LINE OF CREDIT AND SECURITY AGREEMENT [SERVICING SECURED]
together with all amendments, modifications and extensions thereto ("LOAN
AGREEMENT") dated November 8, 1996, together with interest on the unpaid
principal balance thereof as hereinafter set forth, both principal and interest
payable as herein provided in lawful money of the United States of America, for
the account of Bank, at 0000 XXXXXXX XXXXXX, XXXXXX, XXXXX 00000 or at such
other place within Dallas County, Texas or such other address as may be given to
Borrower by the Bank.
This Note (a) is executed and delivered pursuant to the Loan Agreement and
is the Note as defined therein, (b) is subject to the terms and provisions of
the Loan Agreement, which contains provisions for payments and prepayments
hereunder, acceleration of the maturity hereof upon the happening of certain
stated events and the obligation of Bank to advance funds hereunder, and (c) is
secured by and entitled to the benefits of certain Loan Documents (herein so
called). Payments on this Note shall be made and applied as provided herein and
in the Loan Agreement. Reference is hereby made to the Loan Agreement for a
description of certain rights, limitations of rights, obligations and duties of
the parties hereto and for the meanings assigned to terms used and not defined
herein and to the Loan Documents for a description of the nature and extent of
the security thereby provided and the rights of the parties thereto. All
capitalized terms used herein and not otherwise defined herein shall have the
meanings given thereto in the Loan Agreement. The holder of this Note shall be
entitled to the benefits provided for in the Loan Agreement.
Interest shall be due and payable on the tenth day of each month, beginning
JANUARY 10, 1997. Interest shall accrue on the outstanding principal balance of
this Note at the rates specified in the Loan Agreement.
The principal amount of this Note, together with all unpaid interest
accrued hereon, shall be due and payable in full on JANUARY 31, 1998 (the
"MATURITY DATE"). All payments of principal of and interest upon this Note
shall be made by Borrower to the Bank in federal or other immediately available
funds. All payments made hereon shall be due and payable and applied in
accordance with the Loan Agreement.
Notwithstanding the foregoing paragraph and all other provisions of this
Note, in no event shall the interest payable hereon, whether before or after
maturity, exceed the maximum amount of interest which, under applicable law, may
be charged on this Note, and this Note is expressly made subject to the
provisions of the Loan Agreement which more fully set out the limitations on how
interest accrues hereon. In the event applicable law provides for a ceiling
under Texas Revised Civil Statutes Annotated article 5069-1.04, that ceiling
shall be the indicated rate ceiling and shall be used in this Note for
calculating the Maximum Rate and
__________
INITIALED FOR
IDENTIFICATION
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for all other purposes. The term "applicable law" as used in this Note shall
mean the laws of the State of Texas or the laws of the United States, whichever
laws allow the greater interest, as such laws now exist or may be changed or
amended or come into effect in the future.
If this Note is placed in the hands of an attorney for collection after
default, or if all or any part of the indebtedness represented hereby is proved,
established or collected in any court of in any bankruptcy, receivership, debtor
relief, probate or other court proceedings, Borrower and all endorsers, sureties
and guarantors of this Note jointly and severally agree to pay reasonable
attorneys' fees and collection costs to the holder hereof in addition to the
principal and interest payable hereunder.
Borrower and all endorsers, sureties and guarantors of this Note hereby
severally waive demand, presentment for payment, protest, notice of protest,
notice of intention to accelerate the maturity of this Note, diligence in
collecting, the bringing of any suit against any party and any notice of or
defense on account of any extensions, renewals, partial payments or changes in
any manner of or in this Note or in any of its terms, provisions and covenants,
or any releases or substitutions of any security, or any delay, indulgence or
other act of any trustee or any holder hereof, whether before or after maturity.
Maker reserves the right to prepay the outstanding principal balance of
this Note, in whole or in part at any time and from time to time without premium
or penalty, in accordance with the terms of the Loan Agreement.
This Note is executed in renewal, extension and modification (but not in
extinguishment) of that certain Promissory Note dated as of November 8, 1996
executed by Borrower payable to the order of Bank.
THE BORROWER HEREBY AGREES THAT THE OBLIGATIONS CONTAINED HEREIN ARE
PERFORMABLE IN DALLAS COUNTY, TEXAS. ALL PARTIES HERETO AGREE THAT (I) ANY
ACTION ARISING OUT OF THIS TRANSACTION SHALL BE FILED IN DALLAS COUNTY, TEXAS,
(II) VENUE FOR ENFORCEMENT OF ANY OF THE OBLIGATIONS CONTAINED IN THE LOAN
DOCUMENTS SHALL BE IN DALLAS COUNTY, TEXAS, (III) PERSONAL JURISDICTION SHALL BE
IN DALLAS COUNTY, TEXAS, (IV) ANY ACTION OR PROCEEDING UNDER THIS AGREEMENT OR
ANY OTHER LOAN DOCUMENT SHALL BE COMMENCED AGAINST BORROWER IN DALLAS COUNTY,
(V) SUCH ACTION SHALL BE INSTITUTED IN THE COURTS OF THE STATE OF TEXAS LOCATED
IN DALLAS COUNTY, TEXAS OR IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN
DISTRICT OF TEXAS LOCATED IN DALLAS COUNTY, TEXAS, AT THE OPTION OF THE BANK AND
(VI) THE BORROWER HEREBY WAIVES ANY OBJECTION TO THE VENUE OF ANY SUCH SUIT,
ACTION OR PROCEEDING AND ADDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO BE SUED
ELSEWHERE. NOTHING HEREIN SHALL AFFECT THE RIGHT OF BANK TO ACCOMPLISH SERVICE
OF PROCESS IN ANY OTHER MANNER PERMITTED BY LAW.
THIS NOTE, TOGETHER WITH ALL OF THE OTHER LOAN DOCUMENTS SHALL BE GOVERNED
BY AND CONSTRUED ACCORDING TO THE LAWS OF THE STATE OF TEXAS AND THE APPLICABLE
LAWS OF THE UNITED STATES OF AMERICA.
THIS NOTE AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT
BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
__________
INITIALED FOR
IDENTIFICATION
-2-
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
HOMEOWNERS MORTGAGE & EQUITY, INC., a
Delaware corporation, d/b/a HOME, INC.
By:______________________________________
Xxxxx X. Xxxxxx,
Executive Vice President
STATE OF TEXAS (S)
(S)
COUNTY OF DALLAS (S)
This instrument was ACKNOWLEDGED before me the ____ day of February, 1997,
by Xxxxx X. Xxxxxx, Executive Vice President of HOMEOWNERS MORTGAGE & EQUITY,
INC., a Delaware corporation, d/b/a HOME, INC. on behalf of said corporation.
___________________________________________
Notary Public - State of Texas
My Commission expires: ___________________________________________
_____________________ Printed Name of Notary
-3-
[WC]
EXHIBIT "B"
-----------
UNCONDITIONAL GUARANTY
----------------------
WHEREAS, HOMEOWNERS MORTGAGE & EQUITY, INC., A DELAWARE CORPORATION, D/B/A
HOME, INC. (hereinafter called the "BORROWER"), desire to borrow from GUARANTY
FEDERAL BANK, F.S.B. (the "BANK"), the principal sum of FIVE MILLION AND NO/100
DOLLARS ($5,000,000.00) (collectively, the "LOAN"); and
WHEREAS, said borrowings are to be made by the Borrower pursuant to and
under the terms of that Working Capital Line of Credit and Security Agreement
[Servicing Secured] dated effective as of NOVEMBER 8, 1996, between the Borrower
and the Bank together with all amendments thereof (hereinafter called the "LOAN
AGREEMENT") and all promissory notes executed by Borrower in connection
therewith; and
WHEREAS, the undersigned desires the Bank to modify the Loan Agreement and
to continue to make the aforesaid Loan, and the Bank requires, as a condition
thereof, that a guaranty in the form hereof be executed and delivered by the
undersigned;
NOW, THEREFORE, in consideration of the premises and to induce the Bank to
enter into the Loan Agreement and to make the Loan contemplated thereby and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the undersigned, HOMECAPITAL INVESTMENT CORPORATION, a
Nevada corporation (hereinafter called the "GUARANTOR"), hereby unconditionally
guarantees to the Bank and to every subsequent holder or holders of any
promissory note or notes evidencing the Loan (said promissory note or notes
together with any note or notes renewing the same or any part thereof being
hereinafter collectively called the "NOTE") that (i) the principal of and
interest on, and attorneys' fees provided in, the Note will be promptly paid
when due in accordance with the provisions thereof or, in the case of extension
of time of payment in whole or in part of the Note, all sums will be promptly
paid when due in accordance with the terms of the extension; (ii) all covenants
and agreements of the Borrower contained in the Note, the Loan Agreement and/or
any other instrument evidencing, securing or governing the disbursement of the
Loan, whether presently existing or hereinafter entered into, will be duly and
promptly observed and performed; and (iii) all additional amounts owing or which
hereafter become owing by the Borrower under the terms of the Note, the Loan
Agreement and/or any other instrument evidencing, securing or governing the
disbursement of the Loan, whether presently existing or hereinafter entered
into, will be promptly paid when due. This Guaranty directly and substantially
benefits Guarantor.
The obligations of the Guarantor shall be performable without demand of the
Bank and shall be unconditional irrespective of the genuineness, validity,
regularity or enforceability of the Loan Agreement or the Note, or any other
circumstance which might otherwise constitute a legal or equitable discharge of
a surety or a guarantor; and the Guarantor hereby waives diligence, presentment,
demand of payment, protest, all notices (whether of nonpayment, acceleration,
dishonor, protest or otherwise) with respect to the Note, notice of acceptance
of this Guaranty and of the incurring by the Borrower of any of the obligations
hereinbefore mentioned, all demands whatsoever, and all rights to require the
Bank, to (a) proceed against the Borrower, (b) proceed against or exhaust any
collateral held by the Bank to secure the payment of the indebtedness guaranteed
hereby, or (c) pursue any other remedy the Bank may now or hereafter have
against the Borrower.
The Guarantor hereby agrees that, at any time or from time to time, without
notice to the Guarantor:
(1) The time for payment of the principal of or interest on the Note
evidencing the Loan may be extended or the Note may be renewed in whole or
in part;
__________
INITIALED FOR
IDENTIFICATION
(2) The time for the Borrower's performance of or compliance with any
covenant or agreement contained in the Loan Agreement, the Note and/or any
other instrument evidencing, securing or governing the disbursement of the
Loan, whether presently existing or hereinafter entered into, may be
extended or such performance or compliance may be waived;
(3) The maturity of the Note may be accelerated as provided therein or
in the Loan Agreement and/or any other instrument evidencing, securing or
governing the disbursement of the Loan, whether presently existing or
hereinafter entered into;
(4) The Loan Agreement, the Note and/or any other instrument
evidencing, securing or governing the disbursement of the Loan, whether
presently existing or hereinafter entered into, may be modified or amended
by the Bank and the Borrower in any respect, including, but not limited to,
an increase in the principal amount; and
(5) Any security for the Loan may be modified, exchanged, surrendered
or otherwise dealt with and/or additional security may be pledged or
mortgaged for the Loan;
all without affecting the liability of the Guarantor.
The Guarantor hereby acknowledges that the withdrawal from, or termination
of, any ownership interest in Borrower shall not alter, affect or in any way
limit the obligations of Guarantor hereunder.
If this Guaranty shall be placed in the hands of an attorney for collection
or should it be collected by legal proceedings or through any probate or
bankruptcy court, the Guarantor agrees to pay to the Bank's reasonable
attorneys' or collection fees.
The Bank may assign its rights hereunder in whole or in part; and upon any
such assignment, all the terms and provisions of this Guaranty shall inure to
the benefit of such assignee to the extent so assigned. The terms used to
designate any of the parties herein shall be deemed to include the heirs, legal
representatives, successors and assigns of such parties; and the term "Bank"
shall include, in addition to the Bank, any lawful owner, holder or pledgee of
any indebtedness guaranteed hereby.
The Bank is relying and is entitled to rely upon each and all of the
provisions of this Guaranty; and accordingly, if any provision or provisions of
this instrument should be held to be invalid or ineffective, then all other
provisions shall continue in full force and effect.
The Guarantor acknowledges that the Loan represents money which will be
advanced to the Borrower in a series of advances to be made from time to time
pursuant to the Loan Agreement. To induce the Bank to make the advances
thereunder, the Guarantor hereby agrees that in the event of the termination,
liquidation or dissolution of the Borrower, this Guaranty shall continue in full
force and effect.
The Guarantor hereby represents and warrants to the Bank that the financial
statements and information regarding the Guarantor heretofore delivered to the
Bank are true and correct in all material respects, having been applied on a
consistent basis throughout the period covered thereby, and fairly present the
financial position of the Guarantor as of the dates thereof, and that no
material adverse change has occurred in the financial condition of the Guarantor
reflected therein since the date thereof.
The Guarantor hereby represents and warrants to the Bank that:
(a) Neither the execution and delivery of this Guaranty, nor the
consummation of any of the transactions herein or therein contemplated, nor
compliance with the terms and provisions hereof or with the terms and provisions
thereof, will materially contravene or conflict with any provision of law,
statute or
__________
INITIALED FOR
IDENTIFICATION
-2-
regulation to which Guarantor is subject or any judgment, license, order or
permit applicable to Guarantor, or any indenture, mortgage, deed of trust or
other agreement or instrument to which Guarantor is a party or by which
Guarantor may be bound, or to which Guarantor may be subject.
(b) Guarantor is not in default (and no event exists which with notice or
the passage of time could become a default) under any loan agreement, mortgage,
security agreement or other material agreement or obligation to which it is a
party or by which any of its properties is bound including but not limited to
the Loan Documents.
(c) There are no actions, suits or legal, equitable, arbitration or
administrative proceedings pending, or to the knowledge of Guarantor, threatened
against Guarantor.
(d) All tax returns required to be filed by the Guarantor in any
jurisdiction have been filed or extended and all taxes, assessments, fees and
other governmental charges upon Guarantor or upon any of its properties, income
or franchises have been paid prior to the time that such taxes could give rise
to a lien thereon, unless protested in good faith by appropriate proceedings and
with respect to which reserves in conformity with GAAP have been established on
the books of Guarantor. The Guarantor has no knowledge of any proposed tax
assessment against Guarantor.
(e) Guarantor shall permit any authorized officer, employee or agent of the
Bank, to visit and inspect any of the business properties of the Guarantor,
examine Guarantor's books of record and accounts, take copies and extracts
therefrom, and inspect and discuss the procedures, finances and accounts of
Guarantor with Guarantor's accountants and auditors, all at such reasonable
times and as often as Bank may desire. Guarantor shall furnish such reports as
Bank may reasonably request.
Notwithstanding any provision in this Guaranty to the contrary, Guarantor
hereby waives and releases (i) any and all rights of subrogation, reimbursement,
indemnification or contribution which it may have, against others liable on all
or any part of the Loan, (ii) any and all rights to be subrogated the rights of
the Bank in any collateral or security for all or any part of the Loan, and
(iii) any and all other rights and claims of such Guarantor against Borrower or
any third party as a result of such Guarantor's payment of all or any part of
the Loan.
Capitalized terms not defined herein are used as defined in the Loan
Agreement.
The obligations of the Guarantor and any other guarantor of the Note
evidencing the Loan shall be joint and several. The Guarantor agrees that the
Bank, in its sole discretion, may (i) bring suit against the Guarantor and any
other guarantor of the Note evidencing the Loan jointly and severally or against
any one or more of them, (ii) compound or settle with any one or more of the
guarantors of the Note evidencing the Loan for such consideration as the Bank
may deem proper, (iii) release one or more of the guarantors of the Note
evidencing the Loan from liability thereunder, and (iv) otherwise deal with the
Guarantor and any other guarantors of the Note, or any one or more of them, in
any manner whatsoever; and that no such action shall impair the rights of the
Bank to collect the indebtedness hereby guaranteed from the Guarantor. Nothing
contained in this paragraph shall in any way affect or impair the rights or
obligations of the Guarantor with respect to any other guarantor of the Note
evidencing the Loan.
Any indebtedness of the Borrower to the Guarantor now or hereafter existing
(including, but not limited to, any rights to subrogation the Guarantor may have
as a result of any payment by the Guarantor under this Guaranty), together with
any interest thereon, shall be, and such indebtedness is hereby subordinated
until payment in full of the indebtedness of the Borrower to the Bank under the
Loan Documents and all other obligations hereunder. Until payment in full with
interest of the indebtedness of the Borrower to the Bank (and including interest
accruing on the Note after any petition under the Bankruptcy Reform Act of 1978,
as amended (the "BANKRUPTCY CODE"), which post-petition interest the parties
agree shall
__________
INITIALED FOR
IDENTIFICATION
-3-
remain a claim that is prior and superior to any claim of the Guarantor
notwithstanding any contrary practice, custom or ruling in proceedings under the
Bankruptcy Code generally), the Guarantor agrees not to accept any payment or
satisfaction of any kind of any indebtedness of the Borrower to the Guarantor,
except with respect to the payment of any dividends declared by the Borrower,
the payment of which will not cause the Borrower to breach any covenant under
the Loan Agreement, and except with respect to any other payment for which the
Bank grants its prior written consent. Further, the Guarantor agrees that until
such payment in full: (i) no Guarantor shall accept payment from any other
guarantor by way of contribution on account of any payment made hereunder by
such party to the Bank; (ii) no one of them will take any action to exercise or
enforce any rights to such contribution; and (iii) if any individual or entity
comprising the Guarantor should receive any payment, satisfaction or security
for any indebtedness of the Borrower to any individual or entity comprising the
Guarantor or for any contribution by any other individual or entity comprising
the Guarantor for payment made hereunder by the recipient to the Bank at any
time the Borrower is in default under the Loan Documents, the same shall be
delivered to the Bank in the form received, endorsed or assigned as may be
appropriate for application on account of, or as security for the indebtedness
of the Borrower to the Bank. This provision shall not restrict or impair
Guarantor's right to receive dividends declared by the Borrower, which comply
with the covenants under the Loan Agreement. Any lien or charge on the
Collateral (as defined in the Loan Agreement), all rights therein and thereto,
and on the profits, losses, income and distributions to be realized therefrom,
which the Guarantor may have or obtain as security for any loans or advances to
Borrower shall be, and such Lien or charge hereby is, waived. Guarantor waives
any rights Guarantor has under, or any requirements imposed by Chapter 34 of the
Texas Business & Commerce Code, as in effect on the date of this Guaranty or as
it may be amended from time to time. Guarantor waives any rights of subrogation
it may have against the Borrower.
In the event the Borrower is a corporation, joint stock association or
partnership, or is hereafter incorporated, if the indebtedness at any time
hereafter exceeds the amount permitted by law, or the Borrower is not liable
because the act of creating the obligation is ultra xxxxx, or the officers or
persons creating same acted in excess of their authority, and for these reasons
the indebtedness to the Bank which the Guarantor agrees to pay cannot be
enforced against the corporation, joint stock association or partnership, such
fact shall in no manner affect the Guarantor's liability hereunder; but the
Guarantor shall be liable hereunder, notwithstanding any finding that said
corporation, joint stock association or partnership is not liable for such
indebtedness, and to same extend as the Guarantor would have been if the
indebtedness of the Borrower had been enforceable against the Borrower.
This Guaranty is executed in modification (but not extinguishment) of that
certain Unconditional Guaranty dated effective as of November 8, 1996.
THIS GUARANTY AND ALL RIGHTS, OBLIGATIONS AND LIABILITIES ARISING HEREUNDER
SHALL BE CONSTRUED ACCORDING TO THE LAWS OF THE STATE OF TEXAS AND THE UNITED
STATES OF AMERICA.
THIS GUARANTY SHALL BE PERFORMABLE FOR ALL PURPOSES IN DALLAS COUNTY,
TEXAS. COURTS WITHIN THE STATE OF TEXAS SHALL HAVE JURISDICTION OVER ANY AND ALL
DISPUTES BETWEEN GUARANTOR AND BANK, WHETHER IN LAW OR EQUITY, INCLUDING, BUT
NOT LIMITED TO, ANY AND ALL DISPUTES ARISING OUT OF OR RELATING TO THIS GUARANTY
OR ANY OTHER LOAN DOCUMENT; AND VENUE IN ANY SUCH DISPUTE WHETHER IN FEDERAL OR
STATE COURT SHALL BE LAID IN DALLAS COUNTY, TEXAS. GUARANTOR HEREBY CONSENTS TO
PERSONAL JURISDICTION IN DALLAS COUNTY, TEXAS AND WAIVES ANY RIGHTS HE OR SHE
MAY HAVE TO BE SUED ELSEWHERE.
THIS GUARANTY AND THE LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN
THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
__________
INITIALED FOR
IDENTIFICATION
-4-
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
IN WITNESS WHEREOF, this Guaranty has been duly executed by the
undersigned, effective as of, although not necessarily on, the 1st day of
January, 1997.
Address of Guarantor:
--------------------
0000 Xxxxxx Xxxxxx Xxxx. HOMECAPITAL INVESTMENT CORPORATION,
Suite 280 a Nevada corporation
Xxxxxx, Xxxxx 00000
By:___________________________________
Name:______________________________
Title:_____________________________
STATE OF TEXAS (S)
(S)
COUNTY OF XXXXXX (S)
This instrument was ACKNOWLEDGED before me the ____ day of February, 1997,
by _________________________, _____________________ of HOMECAPITAL INVESTMENT
CORPORATION, a Nevada corporation, on behalf of said corporation.
________________________________
Notary Public - State of Texas
My Commission expires: ________________________________
_____________________ Printed Name of Notary
-5-
EXHIBIT "C" [WC]
-----------
ADVANCE REQUEST
---------------
From: HomeOwners Mortgage & Equity, Inc.,
d/b/a Home, Inc.
0000 Xxxxxx Xxxxxx Xxxx., Xxxxx 000
Xxxxxx, Xxxxx 00000
Phone (000) 000-0000
Fax (000) 000-0000
TO: Guaranty Federal Bank, F.S.B. ("Bank")
1. HOMEOWNERS MORTGAGE & EQUITY, INC., A DELAWARE CORPORATION, D/B/A HOME,
INC. ("BORROWER") hereby requests an Advance in the amount and on the date
specified from the Bank (an "ADVANCE") in the amount and on the date herein
specified, pursuant to the Working Capital Line of Credit and Security
Agreement [Servicing Secured] among Borrower and the Bank, dated as of
NOVEMBER 8, 1996, as amended to date (the "AGREEMENT"), and hereby grants
to Bank, in accordance with the provisions of that Agreement, between
Borrower and the Bank, as amended to date, a security interest and Lien in
each Mortgage Loan described on the attached SCHEDULE C-I. Capitalized
terms used herein and defined in the Agreement shall be used herein as so
defined.
2. ADVANCES REQUESTED:
(i) Borrower hereby requests an Advance in the principal amount of
$__________.
(ii) Requested Advance Date: _______________, 199__.
(iii) Borrower hereby grants to the Bank a security interest in
the Servicing Rights described on SCHEDULE I attached hereto.
Requirement of Agreement: Maximum of $5,000,000.00.
Requirement satisfied _______.
Requirement not satisfied _______.
3. The undersigned officer of Borrower represents and warrants to the Bank:
(a) Borrower is entitled to receive the requested Advance under the terms
and conditions of the Agreement;
(b) all items which Borrower is required to furnish to the Bank pursuant
to the Agreement accompany this Advance Request;
(c) all Collateral offered hereby conform in all respects with the
applicable requirements set forth in the Agreement;
(d) no Event of Default has occurred and is continuing under the
Agreement;
(e) no change or event which with notice and/or the passage of time would
constitute an Event of Default; and
(f) attached hereto is the COMPLIANCE SCHEDULE C-II showing Borrower's
compliance as of the date hereof with the requirements of ARTICLE VII
of the Agreement.
4. Borrower represents and warrants that:
(A) The Collateral Value as defined in
the Agreement of all Collateral
prior to this Advance is: $_________________
(B) The outstanding Advances prior to this Advance are:
$_________________
(C) The Collateral Value of all Collateral pledged
to Bank after this Advance Request is: $_________________
(D) The outstanding Advances under the Note after this
Advance Request will be: $_________________
4. The representations and warranties of Borrower contained in the Agreement
and those contained in each other Loan Document to which Borrower is a
party are true and correct in all respects on and as of the date hereof.
HomeOwners Mortgage & Equity, Inc.,
a Delaware corporation, d/b/a Home, Inc.
Date:____________, 199___ By:________________________________________
Xxxxx X. Xxxxxx,
Executive Vice President
STATE OF TEXAS (S)
(S)
COUNTY OF XXXXXX (S)
This instrument was ACKNOWLEDGED before me the ____ day of
________________, 199___, by Xxxxx X. Xxxxxx, Executive Vice President, of
HOMEOWNERS MORTGAGE & EQUITY, INC., a Delaware corporation, d/b/a HOME, INC., on
behalf of said corporation.
------------------------------------
Notary Public - State of Texas
My Commission expires: ____________________________________
_____________________ Printed Name of Notary
-2-
SCHEDULE C-I
SERVICING AGREEMENTS
-3-
[WC]
COMPLIANCE SCHEDULE C-II
------------------------
Financial Covenants Required Actual or
------------------- -------- ------ --
[IN COMPLIANCE]*
---------------
1) Limitation on Indebtedness
of Borrower [7.1]: [YES] or [NO] *
2) No Merger [7.2]: [YES] or [NO] *
3) Fiscal Year [7.3]: [YES] or [NO] *
4) Lines of Business [7.4]: [YES] or [NO] *
5) Liquidations, etc. [7.5]: [YES] or [NO] *
6) Loans [7.6]: [YES] or [NO] *
7) Operational Changes [7.7]: [YES] or [NO] *
8) Compliance with ERISA [7.8]: [YES] or [NO] *
9) Net Worth [7.9]: Not less than
6.2(A) figure
------
plus 7.1(B) & (C) _______
------------
10) Tangible Net Worth [7.10]: [YES] or [NO] *
11) Adjusted Tangible Net Worth [7.11]: Not less than the
greater of (a) ATNW
requirement for preceding
quarter and (b) 80% of
present ATNW _______
12) Debt to Adjusted Tangible Net Not more than
Worth [7.12]: 3.5 to 1.0 _______
13) Minimum Liquidity [7.13]: Not less than
$500,000.00 _______
14) Management [7.14]: [YES] or [NO] *
15) Interested Transactions [7.15]: [YES] or [NO] *
16) Transfer of Stock [7.16]: [YES] or [NO] *
17) Subsidiaries [7.17]: [YES] or [NO] *
-4-
18) Sale or pledge of servicing
contracts [7.18]: [YES] or [NO] *
19) Loss of Eligiblity [7.19]: [YES] or [NO] *
20) Negative Covenants/
Collateral [7.20]: [YES] or [NO] *
HOMEOWNERS MORTGAGE & EQUITY, INC.,
a Delaware corporation, d/b/a HOME, INC.
By: _________________________________________
Xxxxx X. Xxxxxx,
Executive Vice President
______________________________
[Date]
STATE OF TEXAS (S)
(S)
COUNTY OF XXXXXX (S)
This instrument was ACKNOWLEDGED before me the ____ day of __________,
199__, by Xxxxx X. Xxxxxx, Executive Vice President of HOMEOWNERS MORTGAGE &
EQUITY, INC., a Delaware corporation, d/b/a HOME, INC., on behalf of said
corporation.
________________________________
Notary Public - State of Texas
My Commission expires: ________________________________
_____________________ Printed Name of Notary
-5-
Schedule C-II
(Continued)
Most
Recent
Quarter-
end
------------------------------------------------------
12/31/96
------------------------------------------------------
GAAP Net Worth $ 8,726,493
LESS:
Capitalized Servicing (10,521,807)
Account Receivable - Parent (441,888)
Intangibles (1,295)
PLUS:
90% of Capitalized Servicing 9,469,626
------------
Adjusted Tangible Net Worth $ 7,231,129
(A) Current Covenant (calculated at $ 3,705,399
previous quarter end)
(B) 80% of ATNW (calculated at this $ 5,784,903
quarter)
(C) New Covenant for next three months $ 5,784,903
(greater of A and B)
------------------------------------------------------
NET WORTH
GAAP Net Worth at last FYE _______________
PLUS:
80% OF Cumulative Quarterly Net Income since FYE _______________
PLUS:
100% of Capital Contributions since FYE _______________
EQUALS:
Covenant Required Net Worth _______________
Net Worth _______________
In Compliance? Y/N
---------------
ADJUSTED TANGIBLE NET WORTH
GAAP Net Worth _______________
LESS:
Capitalized Servicing _______________
Account Receivable - Parent _______________
Intangibles _______________
PLUS: _______________
90% of Capitalized Servicing _______________
Adjusted Tangible Net Worth _______________
Covenant (see table above) _______________
In Compliance? Y/N
---------------
Page 5 of 6
LEVERAGE RATIO
Total Liabilities _______________
Adjusted Tangible Net Worth _______________
Leverage _______________
Covenant (not to exceed) 3.5:1
---------------
In Compliance? Y/N
---------------
LIQUIDITY
Unrestricted Cash _______________
PLUS:
Net Collateral Surplus _______________
LESS:
Warehouse Borrowings _______________
EQUALS:
Liquidity _______________
Covenant $500,000
---------------
In Compliance? Y/N
---------------
REPURCHASED/INVESTMENT LOANS
Repurchased/Investment Loans on Balance Sheet _______________
Covenant (maximum) $500,000
---------------
In Compliance? Y/N
---------------
LTV (FOR WORKING CAPITAL LINE)
(A) UPS of FNMA Excess Servicing Rights _______________
(B) Most Recent Quarterly Valuation %
---------------
Dated (Date of Valuation) _______________
(C) Value of FNMA Excess Servicing Rights
(A) x (B) _______________
(D) (C) x .50 _______________
(E) Capitalized FNMA Excess Servicing _______________
(F) Lesser of (D) or (E) _______________
(G) Working Capital Principal Balance _______________
Loan to Value (G) - (F) %
---------------
Page 6 of 6
EXHIBIT D
---------
1. Description of all FNMA Eligible Servicing Contracts
(a) Unpaid Principal Balance
(b) Pools and related gains on sale
2. Borrowing Base Calculations
A UPB of FNMA Servicing Rights $_______________
B Appraised Value as of _________. $_______________
C 50% of Appraised Value (.50xB) $_______________
D Book Value as of _________. $_______________
E Lesser of C or D $_______________
F Current Loan Balance $_______________
G Requested Advance $_______________
H New Loan Balance $_______________
I Excess (Deficit) after
Advance (E-H) $_______________
[WC]
EXHIBIT "F"
-----------
1 of 6
COMPLIANCE CERTIFICATE
----------------------
Reference is made to that certain Working Capital Line of Credit and
Security Agreement [Servicing Secured] dated as of NOVEMBER 8, 1996 (the "LOAN
AGREEMENT"), between HomeOwners Mortgage & Equity, Inc., a Delaware corporation,
d/b/a Home, Inc. ("BORROWER") and Guaranty Federal Bank, F.S.B. Terms which are
defined in the Loan Agreement and which are used but not defined herein shall
have the meanings given them in the Loan Agreement. The undersigned,
_____________________ does hereby certify that he/she has made a thorough
inquiry into all matters certified herein and, based upon such inquiry,
experience, and the advice of counsel, does hereby further certify that:
1. He/she is the duly elected, qualified, and acting officer of Borrower.
2. All representations and warranties made by any Related Person in any
Loan Document delivered on or before the date hereof are true on and as of the
date hereof (except to the extent that the facts upon which such representations
are based have been changed by the transactions contemplated in the Loan
Agreement) as if such representations and warranties had been made as of the
date hereof.
3. No Event of Default exists on the date hereof and no event has occurred
and is continuing which with notice and/or opportunity to cure would become an
Event of Default.
4. Each Related Person has performed and complied with all agreements and
conditions required in the Loan Documents to be performed or complied with by it
on or prior to the date hereof.
5. Attached hereto is the COMPLIANCE SCHEDULE showing Borrower's
compliance as of the date hereof with the requirements of ARTICLE VII of the
Loan Agreement and Borrower's non-compliance as of the date hereof with the
requirements of SECTION(S) ________________ of the Loan Agreement.
6. No Net Collateral Deficit exists.
IN WITNESS WHEREOF, this instrument is executed by the undersigned as of
__________________, 1996.
_________________________________________
Xxxxx X. Xxxxxx, Executive Vice President
EXHIBIT "F" [WC]
-----------
2 of 6
STATE OF TEXAS (S)
(S)
COUNTY OF XXXXXX (S)
This instrument was ACKNOWLEDGED before me the ____ day of
___________________, 1996, by Xxxxx X. Xxxxxx, in his capacity as Executive Vice
President of HOMEOWNERS MORTGAGE & EQUITY, INC., a Delaware corporation, d/b/a
HOME, INC., on behalf of said corporation.
________________________________
Notary Public - State of Texas
My Commission expires: ________________________________
_____________________ Printed Name of Notary
[WC]
EXHIBIT "F"
-----------
3 of 6
Compliance Schedule
-------------------
Financial Covenants Required Actual or
------------------- -------- ------ --
[IN COMPLIANCE]*
---------------
1) Limitation on Indebtedness
of Borrower [7.1]: [YES] or [NO] *
2) No Merger [7.2]: [YES] or [NO] *
3) Fiscal Year [7.3]: [YES] or [NO] *
4) Lines of Business [7.4]: [YES] or [NO] *
5) Liquidations, etc. [7.5]: [YES] or [NO] *
6) Loans [7.6]: [YES] or [NO] *
7) Operational Changes [7.7]: [YES] or [NO] *
8) Compliance with ERISA [7.8]: [YES] or [NO] *
9) Net Worth [7.9]: Not less than
6.2(A) figure
plus 7.11(B) & (C) ------
10) Tangible Net Worth [7.10]: [YES] or [NO] *
11) Adjusted Tangible Net Worth Not less than the greater
[7.11]: of (a) ATNW requirement
for preceding quarter and
(b) 80% of present ATNW
_______
12) Debt to Adjusted Tangible
Net Worth [7.12]: Not more than
3.5 to 1.0 _______
13) Minimum Liquidity [7.13]: Not less than
$500,000.00 _______
14) Management [7.14]: [YES] or [NO] *
15) Interested Transactions [7.15]: [YES] or [NO] *
16) Transfer of Stock [7.16]: [YES] or [NO] *
17) Subsidiaries [7.17]: [YES] or [NO] *
18) Sale or pledge of servicing
contracts [7.18]: [YES] or [NO] *
EXHIBIT "F" [WC]
-----------
4 of 6
19) Loss of Eligiblity [7.19]: [YES] or [NO] *
20) Negative Covenants/
Collateral [7.20]: [YES] or [NO] *
HOMEOWNERS MORTGAGE & EQUITY, INC.,
a Delaware corporation, d/b/a HOME, INC.
By: _______________________________________
Xxxxx X. Xxxxxx,
Executive Vice President
______________________________
[Date]
STATE OF TEXAS (S)
(S)
COUNTY OF XXXXXX (S)
This instrument was ACKNOWLEDGED before me the ____ day of __________,
199__, by Xxxxx X. Xxxxxx, Executive Vice President of HOMEOWNERS MORTGAGE &
EQUITY, INC., a Delaware corporation, d/b/a HOME, INC., on behalf of said
corporation.
________________________________
Notary Public - State of Texas
My Commission expires: ________________________________
_____________________ Printed Name of Notary
Exhibit F continued
(Compliance Schedule Method of Calculation)
(5 of 6)
Most
Recent
Quarter-
end
------------------------------------------------------
12/31/96
------------------------------------------------------
GAAP Net Worth $ 8,726,493
LESS:
Capitalized Servicing (10,521,807)
Account Receivable - Parent (441,888)
Intangibles (1,295)
PLUS:
90% of Capitalized Servicing 9,469,626
------------
Adjusted Tangible Net Worth $ 7,231,129
(A) Current Covenant (calculated at $ 3,705,399
previous quarter end)
(B) 80% of ATNW (calculated at this $ 5,784,903
quarter)
(C) New Covenant for next three months $ 5,784,903
(greater of A and B)
------------------------------------------------------
NET WORTH
GAAP Net Worth at last FYE _______________
PLUS:
80% OF Cumulative Quarterly Net Income since FYE _______________
PLUS:
100% of Capital Contributions since FYE _______________
EQUALS:
Covenant Required Net Worth _______________
Net Worth _______________
In Compliance? Y/N
---------------
ADJUSTED TANGIBLE NET WORTH
GAAP Net Worth _______________
LESS:
Capitalized Servicing _______________
Account Receivable - Parent _______________
Intangibles _______________
PLUS: _______________
90% of Capitalized Servicing _______________
Adjusted Tangible Net Worth _______________
Covenant (see table above) _______________
In Compliance? Y/N
---------------
(Compliance Schedule Method of Calculation)
(6 of 6)
LEVERAGE RATIO
Total Liabilities _______________
Adjusted Tangible Net Worth _______________
Leverage _______________
Covenant (not to exceed) 3.5:1
---------------
In Compliance? Y/N
---------------
LIQUIDITY
Unrestricted Cash _______________
PLUS:
Net Collateral Surplus _______________
LESS:
Warehouse Borrowings _______________
EQUALS:
Liquidity _______________
Covenant $500,000
---------------
In Compliance? Y/N
---------------
REPURCHASED/INVESTMENT LOANS
Repurchased/Investment Loans on Balance Sheet _______________
Covenant (maximum) $500,000
---------------
In Compliance? Y/N
--------------
LTV (FOR WORKING CAPITAL LINE)
(A) UPS of FNMA Excess Servicing Rights _______________
(B) Most Recent Quarterly Valuation %
---------------
Dated (Date of Valuation) _______________
(C) Value of FNMA Excess Servicing Rights
(A) x (B) _______________
(D) (C) x .50 _______________
(E) Capitalized FNMA Excess Servicing _______________
(F) Lesser of (D) or (E) _______________
(G) Working Capital Principal Balance _______________
Loan to Value (G) - (F) %
---------------
EXHIBIT "G"
-----------
12/31/96
EXISTING AND PROPOSED INDEBTEDNESS
Existing Indebtedness:
Description Amount
----------- ------
Working Capital Loan $ 3,000,000
$ 5,437,870
Capital lease obligations 11,456
-----------
$ 8,449,326
===========
$5,249,067 loan from
Guaranty Federal Bank
$188,803 loan from
Keystone [shall not be permitted
indebtedness under Section
7.02 after April 30, 1997]
Proposed Indebtedness:
$_________ loan from
________________________
$_________ loan from
________________________
[WC]
EXHIBIT "I"
-----------
CERTIFICATE ACCOMPANYING
------------------------
FINANCIAL STATEMENTS
--------------------
Reference is made to that certain Working Capital Line of Credit and
Security Agreement dated as of NOVEMBER 8, 1996 (as from time to time amended,
the "AGREEMENT"), by and between HOMEOWNERS MORTGAGE & EQUITY, INC., A DELAWARE
CORPORATION, D/B/A HOME, INC. ("BORROWER"), GUARANTY FEDERAL BANK, F.S.B.
("BANK"), which Agreement is in full force and effect on the date hereof. Terms
which are defined in the Agreement are used herein with the meanings given them
in the Agreement.
This Certificate is furnished pursuant to SECTIONS 4.1(A)(7) OR (8) OR 6.2
of the Agreement. Together herewith Borrower is furnishing to Bank Borrower's
audited annual financial statements or unaudited monthly financial statements
(the "FINANCIAL STATEMENTS") dated ______________ (the "REPORTING DATE").
Borrower hereby represents, warrants, and acknowledges to Bank that:
(a) the officer of Borrower signing this instrument is the duly
elected, qualified and acting _____________________________ of
Borrower and as such is Borrower's chief financial officer;
(b) the Financial Statements are accurate and complete and satisfy
the requirements of the Agreement;
(c) attached hereto is the COMPLIANCE SCHEDULE showing Borrower's
compliance as of the Reporting Date with the requirements of
ARTICLE VII of the Agreement and Borrower's non-compliance as of
such date with the requirements of Section(s) _________________
of the Agreement;
(d) on the Reporting Date Borrower was, and on the date hereof
Borrower is, in full compliance with the disclosure requirements
of SECTION 6.6 of the Agreement, and no Default otherwise existed
on the Reporting Date or otherwise exists on the date of this
instrument [except for Default(s) under Section(s)
____________________ of the Agreement, which are more fully
described on a schedule attached hereto].
The officer of Borrower signing this instrument hereby certifies that he
has reviewed the Loan Documents and the Financial Statements and has otherwise
undertaken such inquiry as is in his opinion necessary to enable him to express
an informed opinion with respect to the above representations, warranties and
acknowledgments of Borrower and, to the best of his knowledge, such
representations, warranties, and acknowledgments are true, correct and complete.
IN WITNESS WHEREOF, this instrument is executed as of ________________,
19______.
HOMEOWNERS MORTGAGE & EQUITY, INC.,
a Delaware corporation, d/b/a HOME, INC.
By:______________________________________
Xxxxx X. Xxxxxx,
Executive Vice President
STATE OF TEXAS (S)
(S)
COUNTY OF XXXXXX (S)
This instrument was ACKNOWLEDGED before me the ____ day of
____________________, 199__, by Xxxxx X. Xxxxxx, Executive Vice President of
HOMEOWNERS MORTGAGE & EQUITY, INC., a Delaware corporation, d/b/a HOME, INC., on
behalf of said corporation.
________________________________
Notary Public - State of Texas
My Commission expires: ________________________________
_____________________ Printed Name of Notary
Compliance Schedule
-------------------
Financial Covenants Required Actual or
------------------- -------- ------ --
[IN COMPLIANCE]*
---------------
1) Limitation on Indebtedness
of Borrower [7.1]: [YES] or [NO] *
2) No Merger [7.2]: [YES] or [NO] *
3) Fiscal Year [7.3]: [YES] or [NO] *
4) Lines of Business [7.4]: [YES] or [NO] *
5) Liquidations, etc. [7.5]: [YES] or [NO] *
6) Loans [7.6]: [YES] or [NO] *
7) Operational Changes [7.7]: [YES] or [NO] *
8) Compliance with ERISA [7.8]: [YES] or [NO] *
9) Net Worth [7.9]: Not less than
6.2(A) figure
plus 7.11(B) & (C) _______
10) Tangible Net Worth [7.10]: [YES] or [NO] *
11) Adjusted Tangible Net Not less than the
Worth [7.11]: greater of (a) ATNW
requirement for preceding
quarter and (b) 80% of
present ATNW _______
12) Debt to Adjusted Tangible Not more than
Net Worth [7.12]: 3.5 to 1.0 _______
13) Minimum Liquidity [7.13]: Not less than
$500,000.00 _______
14) Management [7.14]: [YES] or [NO] *
15) Interested Transactions [7.15]: [YES] or [NO] *
16) Transfer of Stock [7.16]: [YES] or [NO] *
17) Subsidiaries [7.17]: [YES] or [NO] *
18) Sale or pledge of servicing
contracts [7.18]: [YES] or [NO] *
19) Loss of Eligiblity [7.19]: [YES] or [NO] *
20) Negative Covenants/
Collateral [7.20]: [YES] or [NO] *
HOMEOWNERS MORTGAGE & EQUITY, INC.,
a Delaware corporation, d/b/a HOME, INC.
By: _______________________________________
Xxxxx X. Xxxxxx,
Executive Vice President
______________________________
[Date]
STATE OF TEXAS (S)
(S)
COUNTY OF XXXXXX (S)
This instrument was ACKNOWLEDGED before me the ____ day of November, 1996,
by Xxxxx X. Xxxxxx, Executive Vice President of HOMEOWNERS MORTGAGE & EQUITY,
INC., a Delaware corporation, d/b/a HOME, INC., on behalf of said corporation.
________________________________
Notary Public - State of Texas
My Commission expires: ________________________________
_____________________ Printed Name of Notary
EXHIBIT I continued
Most
Recent
Quarter-
end
------------------------------------------------------
12/31/96
------------------------------------------------------
GAAP Net Worth $ 8,726,493
LESS:
Capitalized Servicing (10,521,807)
Account Receivable - Parent (441,888)
Intangibles (1,295)
PLUS:
90% of Capitalized Servicing 9,469,626
------------
Adjusted Tangible Net Worth $ 7,231,129
(A) Current Covenant (calculated at $ 3,705,399
previous quarter end)
(B) 80% of ATNW (calculated at this $ 5,784,903
quarter)
(C) New Covenant for next three months $ 5,784,903
(greater of A and B)
------------------------------------------------------
NET WORTH
GAAP Net Worth at last FYE _______________
PLUS:
80% OF Cumulative Quarterly Net Income since FYE _______________
PLUS:
100% of Capital Contributions since FYE _______________
EQUALS:
Covenant Required Net Worth _______________
Net Worth _______________
In Compliance? Y/N
---------------
ADJUSTED TANGIBLE NET WORTH
GAAP Net Worth _______________
LESS:
Capitalized Servicing _______________
Account Receivable - Parent _______________
Intangibles _______________
PLUS: _______________
90% of Capitalized Servicing _______________
Adjusted Tangible Net Worth _______________
Covenant (see table above) _______________
In Compliance? Y/N
---------------
Page 5 of 6
Exhibit I continued
LEVERAGE RATIO
Total Liabilities _______________
Adjusted Tangible Net Worth _______________
Leverage _______________
Covenant (not to exceed) 3.5:1
---------------
In Compliance? Y/N
---------------
LIQUIDITY
Unrestricted Cash _______________
PLUS:
Net Collateral Surplus _______________
LESS:
Warehouse Borrowings _______________
EQUALS:
Liquidity _______________
Covenant $500,000
---------------
In Compliance? Y/N
---------------
REPURCHASED/INVESTMENT LOANS
Repurchased/Investment Loans on Balance Sheet _______________
Covenant (maximum) $500,000
---------------
In Compliance? Y/N
---------------
LTV (FOR WORKING CAPITAL LINE)
(A) UPS of FNMA Excess Servicing Rights _______________
(B) Most Recent Quarterly Valuation %
---------------
Dated (Date of Valuation) _______________
(C) Value of FNMA Excess Servicing Rights
(A) x (B) _______________
(D) (C) x .50 _______________
(E) Capitalized FNMA Excess Servicing _______________
(F) Lesser of (D) or (E) _______________
(G) Working Capital Principal Balance _______________
Loan to Value (G) - (F) %
---------------
Page 6 of 6
